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Montana Industries has computed the following unit costs for the year just ended:

Variable manufacturing overhead $85
Fixed manufacturing overhead 20
Variable selling and administrative cost 18
Fixed selling and administrative cost 11

Which of the following choices correctly depict amounts included in the per-unit cost of inventory under variable costing and absorption costing?
a. Variable, $85; absorption, $105.
b. Variable, $85; absorption, $116.
c. Variable, $103; absorption, $116.
d. Variable, $103; absorption, $105.
e. None of the answers is correct.

Respuesta :

Tundexi

Answer:

a. Variable, $85; absorption, $105.

Explanation:

The options that correctly depict amounts included in the per-unit cost of inventory under variable costing and absorption costing is:

i. Variable costing = Variable manufacturing overhead

Variable costing = $85

ii. Absorption costing = Variable manufacturing overhead + Fixed manufacturing overhead

Absorption costing = $85 + $20

Absorption costing = $105

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